SAMPLE QUESTION PAPER 2 ACCOUNTANCY

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1 SAMPLE QUESTION PAPER 2 ACCOUNTANCY Class XII Time allowed: 3hrs Maximum Marks: 80 General Instructions: (i) This question paper contains two parts A, B. (ii) All parts of a question should be attempted at one place. (iii) Write down the serial Number of the question before attempting it. (iv) The paper contains 23 questions. 1. A, B and C are the partners sharing profits and losses in the ratio of 5:3:2. C retired and his capital balance after adjustments regarding Reserves, Accumulated profits/ losses and gain/loss on revaluation was 2,50,000. C was paid in full settlement. Afterwards D was admitted for 1/4th share. Calculate the amount of goodwill premium brought by D. 2. A and B were partners in a firm. They admitted C as a new partner for 20% share in the profits. After all adjustments regarding general reserve, goodwill, gain or loss on revaluation, the balances in capital accounts of A and B were 3,85,000 and 4,15,000 respectively. C brought proportionate capital so as to give him 20% share in the profits. Calculate the amount of capital to be brought by C. 3. A and B are partners. The net divisible profit as per Profit and Loss Appropriation A/c is 2,50,000. The total interest on partner s drawing is 4,000. A s salary is 4,000 per quarter and B s salary is per annum. Calculate the net profit/loss earned during the year. 4. ABC Ltd. Purchased for cancellation its own 5,000, 9% Debentures of 100 each for 95 per debenture. The brokerage charges 15,000 were incurred. Calculate the amount to be transferred to capital reserve. 5. A Ltd forfeited a share of 100 issued at a premium of 20% for non-payment of first call of 30 per share and final call of 10 per share. State the minimum price at which this share can be reissued 6. A group of 60 persons want to form a partnership business in India. Can they do so? Give reason in support of your answer. 7. Explain with an imaginary example how issue of debenture as collateral security is shown in the balance sheet of a company when it is recorded in the books of accounts. 8. Rekha, Sunita and Teena are partners in a firm sharing profits in the ratio of 3:2:1. Samiksha joins the firm. Rekha surrenders 1/4th of her share; Sunita surrenders 1/3rd of her share and Teena 1/5th of her share in favour of Samiksha. Find the new Profit sharing ratio. 9. King Ltd took over Assets of 25,00,000 and liabilities of 6,00,000 of Queen Ltd. King Ltd paid the purchase consideration by issuing 10,000 equity shares of 100 each at a premium of 10% and 1 by Bank Draft. Calculate Purchase consideration and pass necessary Journal entries in the books of King Ltd. 10. ABC Ltd was a cloth manufacturing company located in Delhi. Being a socially aware organisation they wanted to set up a manufacturing plant in a backward area of Kashmir to provide employment to the local people. On July 17, 2014 a flood had hit the entire state of Jammu & Kashmir causing massive destruction and loss. The company wanted to help the people, so they decided to raise the funds through issuing 50,000 Equity shares of 50 each to set up the plant in the rural area of Kashmir. Pass necessary Journal entries for the issue of shares and identify any two values that the company wanted to communicate to the society. 11. A, B, C and D were partners sharing profits in the ratio of 1:2:3:4. D retired and his share was acquired by A and B equally. Goodwill was valued at 3 year s purchase of average profits of last 4 years, which were. General Reserve showed a balance of 1,30,000 and D s Capital in the Balance Sheet was at the time of D s retirement. You are required to record necessary Journal entries in the books of the firm and prepare D s capital account on his retirement. 12. Kavita, Meenakshi and Gauri are partners doing a paper business in Ludhiana. After the accounts of partnership have been drawn up and closed, it was discovered that for the years ending 31st March 2013 and 2014, Interest on capital has been allowed to 6% p. a. although there is no provision for interest on capital in the partnership deed. Their fixed capitals were ; 1,60,000 and 1, respectively. During the last two years they had shared the profits as under: Year Ratio 31 March : 2 : 1 31 March : 3 : 2 You are required to give necessary adjusting entry on April 1, On 31st March 2015 the Balance Sheet of Punit, Rahul and Seema was as follows Balance Sheet of Punit, Rahul and Seema As at March 31, 2015 Liabilities Amount Assets Amount Capitals: Punit 60,000 Rahul 50,000 Seema 30,000 Reserves Creditors 1, 14,000 Buildings Machinery Patents Stock Cash 60,000 42,000

2 They were sharing Profit and loss in the ratio 5:3:2. Seema died on October 1, It was agreed between her executors and the remaining partners that: i. Goodwill be valued at 2 years purchase of the average profits of the previous five years, which were: : 30,000; : 26,000; : 24,000; : 30,000 and :. ii. Patents be valued at 16,000; Machinery at 56,000; Buildings at 60,000. iii. Profit for the year be taken as having been accrued at the same rate as that in the previous year. iv. Interest on capital be provided at 10% p. a. v. A sum of 15,500 was paid to her executors immediately. Prepare Revaluation Account, Seema s Capital Account and Seema s executors Account. 14. Ruchi Ltd issued 42,000, 7% Debentures of 100 each on 1st April, 2011, redeemable at a premium of 8% on 31St March The Company decided to create required Debenture Redemption Reserve on 31st March The company invested the funds as required by law in a fixed deposit with State Bank of India on 1st April, 2014 earning per annum. Tax was deducted at source by the bank on per annum. Pass necessary Journal Entries regarding issue and redemption of debentures. 15. Hema and Garima were partners in a firm sharing profits in the ratio of 3:2. On March 31, 2015, their Balance Sheet was as follows: Balance Sheet of Hema and Garima as at March 31, 2015 Liabilities Amount Assets Amount Creditors Garima s Husband s Loan Hema s Loan Capitals: Hema Garima 36,000 60,000 Bank Debtors Stock Furniture Leasehold Premises 76,000 4,36,000 4,36,000 On the above date the firm was dissolved. The various assets were realized and liabilities were settled as under: (i) Garima agreed to pay her husband s loan. (ii) Leasehold Premises realized 1,50,000 and Debtors 2,000 less. (iii) Half the creditors agreed to accept furniture of the firm as full settlement of their claim and remaining half agreed to accept 5% less. (iv) 50% Stock was taken over by Hema on cash payment of 90,000 and remaining stock was sold for 94,000. (v) Realisation expenses of 10,000 were paid by Garima on behalf of firm. (vi) Pass necessary journal entries for the dissolution of the firm. 16. P and Q were partners in a firm sharing profits in 3; 2 ratio. R was admitted as a new partner for 1/4th share in the profits on April 1, The Balance Sheet of the firm on March 31, 2015 was as follows: Balance Sheet of P and Q As at March 31, 2015 Liabilities Amount Assets Creditors General Reserve Capitals: P 96,000 Q 68,000 16,000 1,64,000 Cash Debtors Stock Furniture Machinery Buildings 18,000 90,000 The terms of agreement on R s admission were as follows: a) R brought in cash 60,000 for his capital and 30,000 for his share of goodwill. b) Building was valued at and Machinery at 36,000. c) The capital accounts of P and Q were to be adjusted in the new profit-sharing ratio. Necessary cash was to be brought in or paid off to them as the case may be. Prepare Revaluation Account, Partner s Capital Account and the Balance Sheet of P, Q and R. OR Khushboo, Leela and Meena were partners in a firm sharing profits in the ratio of 5:3:2. Their Balance Sheet on March 31, 2015 was as follows Balance Sheet of Khushboo, Leela and Meena (As at March 31, 2015) Liabilities Assets Creditors Capitals: Khushboo90,000 Leela56,000 Meena60,000 70,000 2,06,000 On April 1,2015Leela retired on the following terms: i. Building was to be depreciated by10,000. Bank Debtors Stock Buildings Profit & Loss A/c 44,000 24,000 60,000 1, 8,000 2,76,000 2,76,000 info@newparameter.com /

3 ii. A Provision of 5% was to be made on Debtors for doubtful debts. iii. Salary outstanding was 4,800. iv. Goodwill of the firm was valued at 1,. v. Leela was to be paid 20,800 through cheque and the balance was to be paid in two equal quarterly installments (starting from June 30, 2015) along with 10% p.a. Prepare Revaluation Account, Leela s Capital Account and her Loan Account till it is finally paid. 17. Surya Ltd with a Registered capital of 10,00,000 Equity Shares of10 each, issued Equity Shares payable 3 on Application, 2 on Allotment, 3 on First Call and 2 on Second and Final Call. The amount due on Allotment was duly received except Mr. X holding 6,000 shares. His shares were immediately forfeited. On the first call being made, Mr. Y holding 5,000 Equity shares paid the entire balance on his holding. Second call was not made. Pass the necessary Journal Entries to record the transactions and Show how the Share Capital will be presented in the Balance Sheet of the Company. Also prepare notes to accounts. OR a) Nidhi Ltd. issued 2,000 Shares of 100 each. All the money was received except on 200 shares on which only 90 per share were received. These shares were forfeited and out of the forfeited shares 100 shares were reissued at 80 each as fully paid up. Pass necessary Journl entries for the above transactions and prepare the Forfeited Share Account. b) Complete the following Journal Entries: S.No Particulars L.F Debit Credit Dr To To (Being the forfeiture of 1000 shares of10 each,8 called up, on which allotment money of2 and First Call of3 has not been received.) Dr To To (Being reissue of 1000 forfeited shares fully paid up at11 per share) Dr To ( Being gain on the reissue of shares transferred to capital reserve Account) ANALYSIS OF FINANCIAL STATEMENTS PART B 18. The Goodwill of X ltd. increased from2, 00,000 in to3, 50,000 in What will be its treatment while preparing Cash Flow Statement for the year ended 31st March 2015? 19. KartikMutuals, a mutual fund company, provides you the following information: 31st March st March 2014 Proposed Dividend 15,000 Additional Information: Equity Share Capital raised during the year 10% bank loan repaid was Dividend received during the year was Find out the cash flow from financing activities. 20. Mudra Ltd. is in the process of preparing its Balance Sheet as per Schedule III, Part I of the Companies Act, 2013 and provides its true and fair view of the financial position. a) Under which head and sub-head will the company show Stores and Spares in its Balance Sheet? b) What is the accounting treatment of Stores and Spares when the Company will calculate its Inventory Turnover Ratio? c) The management of Mudra Ltd. want to analyse its Financial Statements. State any two objectives of such analysis. d) Identify the value being followed by Mudra Ltd. 21. a) X Ltd. has a current ratio of 3.5:1 and quick ratio of 2:1. If excess of current assets over quick assets represented by Inventory is24,000, calculate current assets and current liabilities. b) From the following information, calculate Inventory Turnover Ratio. Revenue from Operations:4,00,000, Average Inventory :55,000, The rate of Gross Loss on Revenue from Operations was 10%. info@newparameter.com /

4 22. From the following Statement of profit and loss of the Sakhi Ltd for the years ended 31st March 2015, prepare Comparative Statement of Profit & Loss. STATEMENT OF PROFIT & LOSS for the years ended 31st March, 2015 Particulars Revenue from operationsexpenses: (a) Employee benefit expenses were 5% of Revenue from operations (b) Other expenses 25,00,000 5,90,000 40,00,000 6,80,000 Rate of Tax 35% 23. Following is the Balance Sheets of Akash Ltd. as at Akash Ltd. Balance Sheetas at S.No PARTICULARS Note no I EQUITY & LIABILITIES (1) Shareholders Funds (a) Share Capital (b) Reserves & Surplus (2) Non - Current Liabilities (a) Long Term Borrowings (3) Current Liabilities (a) Short term borrowings (b) Trade Payables (c) Short term provisions ,00,000 2,50,000 15,000 18,000 14,00,000 1,10,000 1,25,000 10,000 83,000 11,000 Total 19,95,000 17,39,000 II (1) Non - Current Assets (a) Fixed Assets 4 (i) Tangible assets (ii) Intangible assets 18,60,000 50,000 16,10,000 30,000 (2) Current Assets 5 (a) Current Investments (b) Inventories (c) Trade Receivables (d) Cash & Cash Equivalents 8,000 37,000 26,000 14,000 5,000 59,000 23,000 Total 19,95,000 17,39,000 Notes to Accounts:- S.No PARTICULARS Reserves and Surplus:- Surplus (balance in Statement of Profit and Loss) 2,50,000 1,10,000 2 Short Term Borrowings Bank Overdraft 10,000 3 Short term provisions Provision for Tax 18,000 11,000 4 Tangible Assets Machinery Accumulated Depreciation 20,00,000 (1,) 17,00,000 (90,000) 5 Intangible Assets Patents 50,000 30,000 Additional Information: (i) Tax paid during the year amounted to 16, 000. (ii) Machine with a net book value of 10,000 (Accumulated Depreciation ) was sold for 2,000. Prepare Cash Flow Statement. info@newparameter.com /

5 SAMPLE PAPER 1 SOLUTIONS 1. Goodwill share of C= - 2,50,000= 50,000 Firm s Goodwill= 50,000x10/2=2,50,000 D s share in Goodwill= 2,50,000x1/4=62, Combined capital of A and B = 3,85,000+ 4,15,000= 8,00,000 C s Share= 1/5th of total capital Remaining share= 1-1/5=4/5 4/5= 8,00,000 C s capital= 8,00,000x5/4x1/5= 3. Net Profit during the year = Divisible profits + Salary to partners Interest on Drawings = 2,50, , = 3,02, Amount paid for 5,000 Debentures= 4,75,000+15,000= 4,90,000 The nominal value of debentures to be redemption/cancelled= 5,00,000 Amount of profit on redemption to be transferred to capital reserve= 5,00,000-4,90,000= 10, Minimum price at which shares can be reissued = = No, Maximum no. of partners as per The Companies Misc. Rule, 2014 is 50 persons 7. Alfa Ltd. obtained Loan of 1, 00,000 from Indian Bank and issued 1200, 10% Debentures of 100 each as Collateral security. (or any other example) Treatment: An extract of Balance sheet of Alfa Ltd. as at Particulars Note No. Amount EQUITY AND LIABILITIES Noncurrent liabilities Long Term Borrowings Notes to Accounts: Note No. Particulars Amount Long Term Borrowings Loan from Indian Bank 1200, 10% Debentures of 100 each issued as Collateral Security Less: debenture Suspense 1, (1,) 8. Rekha surrenders for Samiksha = ¼ *3/6 =3/24 Sunita surrenders for Samiksha = 1/3*2/6=2/18 Teena surrenders for Samiksha = 1/5*1/6=1/30 New share of Rekha = 3/6-3/24 =9/24 New share of Sunita = 2/6-2/18 =4/18 New share of Teena = 1/6-1/30 =4/30 Share of Samiksha = 3/24+2/18+1/30=97/360 New Ratio :- 9/24:4/18:4/30:97/ : 80 : 48 : Calculation of Purchase Consideration: Nominal Value of Shares issued = x 100 = 10,00,000 Securities Premium Reserve = Bank draft = 1 Purchase consideration = 2 KING LTD.JOURNAL I Sundry Assets A/c Dr Goodwill A/c (b/f) Dr To Sundry Liabilities A/c To Queen Ltd. (Being the purchase of assets and liabilities of Queen Ltd.) Queen Ltd Dr II To Equity Share capital A/c To Securities Premium Reserve A/c (Being 10,000 Equity Shares issued of 100 each issued at a premium of 10% and 1 paid by Bank draft) 10. ABC LTD. JOURNAL 25,00,000 2 info@newparameter.com / ,00, ,00,000 1 I Bank A/c Dr. To Equity Share Application & Allotment A/c (Being the amount of application money received on 50, per share.) 25,00,000 25,00,000

6 II Equity Share Application & Allotment A/c Dr. 25,00,00 To Equity Share Capital A/c 25,00,000 (Being the amount transferred to Share Capital A/c) Values which the Company wants to communicate to the Society: (i) Discharge of Social Responsibility. (ii) Generation of employment opportunities. (iii)helping the needy people (iv)sympathy for poor. 11. JOURNAL I II A s Capital A/c Dr. B s Capital A/c Dr. To D s Capital A/c (Treatment of goodwill on retirement of D) General Reserve Dr. To A s Capital A/c To B s Capital A/c To C s Capital A/c To D s Capital A/c (General Reserve distributed) 24,000 24,000 1,30,000 48,000 13,000 26,000 39,000 52,000 Dr. D s Capital Account Cr. PARTICULARS AMOUNT PARTICULARS AMOUNT To D s Loan A/C 4,00,000 By Balance b/d By A s Capital A/c By B s Capital A/c By General Reserve 24,000 24,000 52,000 4,00,000 4,00, Table Showing Adjustment Particulars Kavita Meenakshi Gauri total Interest on Capital ( ) Dr. Interest on Capital ( ) Dr. 9,600 9,600 7,200 7,200 28,800 28,800 Total Dr. 24,000 19,200 14,400 57,600 Profit to be credited ( ) Cr. Profit to be credited ( ) Cr. 14,400 14,400 9,600 8,640 4,800 5,760 28,800 28,800 Total Cr. 28,800 18,240 10,560 57,600 Adjustments 4,800 Cr. 960 Dr. 3,840 Dr JOURNAL ENTRY: 2014 Apr 1 Meenakshi s Current A/c Dr. Gauri s Current A/c Dr ,840 To Kavita s Current A/c (Adjustment for interest on capital for the year and ) 4, Dr. Revaluation Account Cr. Particulars Amount Particulars Amount To Machinery To Profit Distributed: Punit 10,000 Rahul 6,000 Seema 4,000 4,000 By Patents By Buildings 4,000 24,000 24,000 Dr. Seema s Capital Account Cr. Date Particulars Amount Date Particulars Amount 2015 Oct1 To Seema s Executor s A/c 55, Apr 1 By Balance b/d 30,000 info@newparameter.com /

7 By Reserves By Punit s Capital By Rahul s Capital By Revaluation A/c By P & L Suspense By Int. on Capital 4,000 7,500 4,500 4,000 4,000 1,500 55,500 55,500 Dr. Seema s Executive Account Cr. Date Particulars Amount Date Particulars Amount 2015 To Seema s Executor s Loan A/c Working Note: Average Profit= (30,000+26,000+24,000+30,000+)/5= 30,000 Goodwill= 30,000 X 2 = 60,000 Seema s share of Profit for 6 months= X 6/12 X 2/12 = 4,000 Interest on Seema s Capital = 30,000 X 10/100 X 6/12 = 1,500 15, By Seema s Capital A/c 55,500 55,500 55, RUCHI LTD. JOURNAL ISSUE OF DEBENTURES 2011 Bank A/c Dr. To 4 April 1 Debenture Application & Allotment A/c (Being the Application and allotment money received on issue of Debentures) 4 April 1 Debenture Application & Allotment A/c Dr. Loss on Issue of Debenture A/c Dr. To 7% 4 3,36,000 debenture A/c To Premium on Redemption of Debenture A/c (Being 4 3,36,000 allotment of Debentures redeemable at 8% premium) REDEMPTION OF DEBENTURES: 2014 Surplus i.e. balance in Statement of Profit & Loss Dr. 10,50,000 March 31 To Debenture redemption Reserve A/c (Being the profits transferred to Debenture Redemption Reserve) 10,50, April March March 31 March 31 March 31 Debenture Redemption Investment A/c Dr. (Being the Investment made as fixed deposit as per Companies Act, 2013 earning Bank A/c Dr. TDS collected A/c Dr. To Debenture Redemption Investment A/c To Interest Earned A/c (Being the fixed deposit encashed on Redemption and interest 7% Debenture A/c Dr Premium on Redemption of Debenture A/c Dr To Debenture holder s A/c (Being amount due to Debenture holders) Debentureholder s A/c Dr. (Being the amount due paid on redemption) Debenture Redemption Reserve A/c Dr. To General Reserve A/c (Being Debenture Redemption Reserve transferred to General Reserve) 6,30,000 6,86,700 6, ,36,000 45,36,000 10,50,000 6,30,000 6,30,000 63,000 45,36,000 45,36,000 10,50, Journal info@newparameter.com /

8 16. 1 Realisation A/c Dr. 3,96,000 To Debtors A/c To Stock A/c To Furniture A/c To Leasehold Premises A/c (Being Assets transferred to Realisation A/c) 76,000 2 Creditors A/c Dr. Garima s Husband A/c Dr. To Realisation A/c (Being third party liabilities transferred to Realisation A/c) 3 Bank A/c Dr. To Realisation A/c (Being Assets realised) 4 Realisation A/c Dr. (Being creditors paid) 5 Realisation A/c Dr. To Garima s Capital A/c (Being realization expenses and Garima s husband loan paid off by Garima) 6 Realisation A/c Dr. To Hema s Capital A/c To Garima s Capital A/c (Being profit on realization distributed among partners) 7 Hema s Loan A/c Dr. (Being Hema slaon paid) 8 Hema s Capital A/c Dr. Garima s Capital A/c Dr. (Being amount paid to partners at final settlement of accounts) 36,000 60,000 4,08,000 17,100 70,000 20,900 2,12,540 1,78,360 Dr. Revaluation Account Cr. Particulars l.f Amount Particulars Amount To Machinery 4,000 By Buildings 10,000 To Profit Distributed: P 3,600 Q 2,400 6,000 10,000 10,000 96,000 4,08,000 17,100 70,000 12,540 8,360 3,9,900 Dr.Partners Capital Account Cr Particulars P Q R Particulars P Q R To Cash A/c To Balance C/d 19,200 1,08,000 6,800 72,000 60,000 By Balance b/d By General Reserve By Cash A/c By Premium A/c By Revaluation A/c 96,000 68,000 9,600 6,400 60,000 18,000 3,600 2,400 1,27,200 88,800 60,000 1,27,200 88,800 60,000 info@newparameter.com /

9 Balance Sheet of P, Q and R As at April 1, 2015 Liabilities Amount Assets Amount Creditors Capital: P 1,08,000 Q 72,000 R 60,000 Building Machinery Cash (+60,000+30,000-19,200-16,800) Debtors Stock Furniture 36,000 74,000 2, 18,000 2,60,000 2,60,000 OR Dr. Revaluation Account Cr. Particulars L.F Amount Particulars L.F Amount To Buildings 10,000 By Loss Distributed To Prov. for Doubtful Debts 1,200 Khushboo 8,000 To Salary Outstanding 4,800 Leela 4,800 Meena 3,200 16,000 16,000 16,000 Dr. Leela s Capital Account Cr. Particulars L.F Amount To Profit & Loss A/c 2,400 To Revaluation A/c 4,800 20,800 To Leela s Loan A/c 70,000 98,000 Particulars L.F Amount By Balance b/d 56,000 By Khushboo s Capital 30,000 By Meena s Capital 98,000 Dr. Leela s Loan Account Cr. Date Particulars L. F Amount Date Particulars L. F Amount 2015 Jun 30 Sep 30 36,750 35, Apr 1 Jun 30 Sep 30 By Leela s Capital By Interest By Interest 70,000 1, ,625 72, In the books of Surya Ltd.: Journal S.No Particulars L.F Debit Credit 1 Bank A/c Dr. To Equity Share Application A/c (Being the application money received on 3 per share received) 2 Equity Share Application A/c Dr. To Equity Share Capital A/c (Being the application money transferred to Share Capital A/c) 3 Equity Share Allotment A/c Dr. To Equity Share Capital A/c (Being Allotment made due on Equity 2 per share) 4 Bank A/c Dr. Calls in Arrears A/c Dr. 1,88,000 To Equity Share Allotment A/c (Being the Allotment money received except for 6,000 shares ) 5 Equity Share Capital A/c Dr. To Share Forfeited A/c To Calls in Arrears A/c 30,000 18,000 info@newparameter.com /

10 (Being 6,000 shares forfeited for non-payment of allotment money) 6 Equity Share First Call A/c Dr. To Equity Share Capital A/c (Being First Call made due on 94,000 Equity 3 per share) 7 Bank A/c Dr. To Equity Share First Call A/c To Calls in Advance A/c (Being the First Call money received on 94,000 Equity 3 per share and Rs.2 per share on 5,000 shares received in Advance) 2,82,000 2,92,000 2,82,000 2,82,000 10,000 Balance Sheet of Surya Ltd. as at Particulars Note no Amount I EQUITY AND LIABILITIES 1. Shareholder s Funds Share Capital 1 7,82,000 Notes to Accounts: Note no Particulars Amount 1 Share Capital Authorised Share Capital 10,00,000 Equity Shares of 10 each. Issued Share Capital Equity Shares of 10 each Subscribed Share capital Subscribed but not fully paid-up 94,000 equity shares of 10 each,8 Called up 7,52,000,000 10,00,000 Add Share Forfeited Account 18,000 7,82,000 Forfeited Share A/c Particular Amount Particular Amount To Share Capital A/c 2,000 By Share Capital A/c 18,000 (100x20) To Capital Reserve (100x70) To Balance c/d 7,000 9,000 (200x90) 18,000 18,000 OR JOURNAL S.No Particular L.F Debit Credit 1 Share Capital A/c Dr. To Forfeited Share A/c To Calls in Arrears A/c (Being 200 shares forfeited for non-payment of call money of Rs.10 per share) 2 Bank A/c Dr. Forfeited Share A/c Dr. To Share Capital A/c (Being 100 shares re-issued for Rs.80 per share as fully paid up) 3 Forfeited Share A/c Dr. To Capital Reserve (Being Allotment made due on Equity 2 per share) 8,000 10,000 1,000 3,000 3,000 2,000 3,000 11,000 3, It will be taken as purchase of Goodwill of 1,50,000 and will be shown under Cash from Investing Activities as an outflow of cash. 19. Proceeds from Equity share capital : Repayment of Bank Loan: () Dividend Paid: () ,80,000 info@newparameter.com /

11 20. a) Head: Current Assets Sub head ; Inventories b) While calculating Inventory Turnover Ratio it is not included in Inventories c) Objectives - Assessing the ability of the enterprise to meet its short term and long term commitments, Assessing the earning capacity of the enterprise d) Values: Transparency, Honesty, Abiding by law 21. a) Current Ratio = 3.5:1 Quick Ratio = 2:1 Let Current Liabilities = x Current Assets = 3.5x And Quick Assets = 2x Inventory = Current Assets Quick Assets 24,000 = 3.5x 2x 24,000 = 1.5x x = Rs.16,000 Current Assets = 3.5x = ,000 =56,000. Verification : Current Ratio = Current Assets : Current Liabilities =56,000 :16,000 = 3.5 : 1 Quick Ratio = Quick Assets : Current Liabilities =32,000 :16,000 = 2:1 b) Revenue from Operations =4,00,000 Gross Loss = 10% of 4,00,000 = Cost of Revenue from Operations = Revenue from Operations + Gross Loss = 4,00,000 + = 4, Inventory Turnover Ratio = Cost of Goods Sold/ Average Inventory =4, /55,000 = 8 times. 22. STATEMENT OF PROFIT & LOSS for the years ended 31st March 2015 & 2016 Particulars Absolute Change (in Rs) Revenue from operations Expenses: (a) Employee benefit expenses (b) Other expenses Total expenses Profit before tax Less: 35% Profit after tax 25,00,000 1,25,000 40,00,000 15,00,000 75,000 %age Change 5,90,000 6,80,000 90, ,15,000 8,80,000 1,65, ,85,000 31, 13,35, ,24,750 10,92,000 4,67, ,60,250 20,28,000 8,67, Cash Flow Statement For the year ended 31st March,2014 Particulars Amount Amount I CASH FLOW FROM OPERATING ACTIVITIES Surplus: Balance in the Statement of Profit & Loss (closing) Less: Surplus: Balance in the Statement of Profit & Loss (beginning) NET PROFIT Add: Provision for Tax Net Profit before Tax and Extraordinary Items Add: Non-Cash and Non-operating Expenses: Depreciation Loss on Sale of Machine Add: Decrease in Current Assets & Increase in Current Liabilities Inventories 90,000 8,000 22,000 info@newparameter.com / ,50,000 1,10,000 1, 23,000 1,63,000 98,000 2,61,000 22,000 2,83,000

12 Less: Increase in Current Assets & Decrease in Current Liabilities Trade Receivabes Trade Payables Cash generated from Operating Activities Less: Income Tax Paid 3,000 68,000 71,000 2, (16,000) Cash Flow From Operating Activities 1,96,000 II CASH FLOW FROM INVESTING ACTIVITIES Sale Of Machinery Purchase of Machinery Purchase of Patents 2,000 (3,50,000) () Cash Used in Investing Activities (3,68,000) III CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Issue of Share Capital Proceeds from Long term Borrowings Increase in Bank Overdraft 75,000 2,000 Cash Flow From Financing Activities 1,77,000 IV NET INCREASE IN CASH & CASH EQUIVALENTS (I+II+III) 5,000 V CASH &CASH EQUIVALENTS IN THE BEGINNING OF THE YEAR Current Investments Cash & Cash Equivalents 5,000 17,000 VI CASH &CASH EQUIVALENTS AT THE END OF THE YEAR 22,000 Current Investments Cash & Cash Equivalents 8,000 14,000 22,000 info@newparameter.com /